Thursday, February 12, 2009

Thursday Notes - Transition Day

5:30pm - Today was quite the interesting day and mix of rhythms as I was a step slow for much of the first 2/3 of the day before finally aligning myself with the market rhythm in the latter part of the session when we finally had some market pace (yup, there's that word again). I actually spent most of the day providing liquidity instead of focusing on speculative entries, and as a result had only a modest chip gain due to a fairly high transaction cost day.

And today may have been a transition day in more than one sense, as in addition to the strong shift in market sentiment late in the day with a world of stuck shorts causing the futures to spike, I'm currently making plans to make a rather significant shift in my standard trading size for the first time in several years. As a result, I'm going to view the rest of February as an investment and trial period without much emphasis on the end-of-month bottom line.

This is a decision that I've weighed for several months now, and while I'm sure many have wondered why I'm typically trading only 15-60 contracts with a $2.5M account, the correct answer has always been ... "because that's how it GOT to $2.5M".

OK, so why the change? Suffice it to say that I've decided that I need a new source of motivation to keep the fire burning, which became clear after Tuesday's abysmal performance which was due primarily to an initial distraction and terrible subsequent focus. In other words, I can trade my current size in my sleep and sometimes get lulled as a result of the complacency. So I have to rid myself of the complacency factor.

I also have consistency going for me -- aside from Tuesday's aberration -- in terms of 31 of 32 days in the black. Besides, Tuesday also put one of the 2 or 3 days from hell everyone has during the course of the year immediately behind me, so I figure the timing is right.

On the following point, I want to be crystal clear: I don't expect the transition will be easy. Frankly, I expect it could very well be the toughest challenge of my career and as a result, my goal will be breakeven during the transition period, which could last a few weeks to up to a month.

I haven't yet determined the exact sizing adjustments, and will use much of the upcoming weekend to think through it.

But it is indeed time.

Time for a new challenge to fuel the fire.

Time to put myself to yet another test while I still have my sanity.

Time for a new journey.

Fasten your seat belts team ... it could get a bit bumpy.


RONIN said...

Hi Don!

Moving up in the blinds, eh?

Great for you. Good luck. Tight and selective agressive?


E said...

Carpae Diem!

We're all rooting for you.

Can you move that push pin over to the left a little?

Teasing, great location. We go by there on the way to MV for a week vacation with family every summer.


Unknown said...

Well, the drawdowns continue for me. Tried to play the gap - stop hit
Played pivot - stop hit.
Scratched back halfway. Then when I decide to play the TICK fade - I get stopped out and give all back.



Get In Get Out said...


Are you thinking about having a different strategy to your trading that is different from your consistent strategy as you add size? Would you make less trades but in bigger size waiting for the right set-up to evolve? You can sit all day watching the chart for the perfect set up then hit an order for 80 lots and try to get 2 points for $4K/point minus commission for a gross of $8K/day... I fantasize about these size trades and often wonder if I will be patient & disciplined enough to trade in this size. Cheers & Good Luck...

Being said...

Impressive challenge you are undertaking, Don. Can certainly relate, as I trade much smaller than my account would allow too, and am also ramping up.

Have added a new row to my clone of your Weekly Performance Chart. I call it "Getting the trade", because i was at the screen all day, til 3:07, and after getting stopped out break-even for the third time in about half an hour, thought "guess it's just going to dribble down the rest of the day" and left to get a cup of soup, thereby missing the beginning of the huge day-end rally. I will spend the weekend wondering what made me choose that moment to leave.

KH said...


Could you explain to me what you do as a market maker and also what influence do market makers have with respect to the direction of the market.

Don Miller said...

OK, where do I start.

Ronin - Trying anyway.

E - Seize the day indeed.

apprazzr - Hang in there. My morning absolutely sucked before I started simply providing liquidity in the chop. Before that, it was death by a thousand paper cuts.

GIGO - No different strategy ... worse thing I could do is to change size and something that's worked for years.

EK - Remember the expected move never occurs until the last frustrated trader gives up. Still, that move wasn't the norm and I'm not going to lose any sleep over it.

KH - Not sure how to answer as the market depth reflects all sorts of traders. I think traders providing liquidity around the market price frankly have very little to do with ultimate market action except when the market is thin.

The more traders doing so though, the better the liquidity and ability to trade size, which is why ES is one of the most traded futures vehicles.


David Aranzabal said...

Hi Don!
This is a full time forex trader from Spain. Congratulations for your track record !! Trading is a hard work and is hard to success month by month, year by year.
Just one question: Did you build up your account just trading or did you start with 700.000 $ coming from other business? Thanks.

Don Miller said...

[I inadvertently first posted this in Friday's response]

Hi David -

I started with about a $200K account a few years ago, so the initial $700K '08 balance reflected a built up balance to the start of '08 as the result of prior trading efforts.